India, China aim for $60-billion trade by '10

Diwakar & Saibal Dasgupta

The radical revision of the target came even as Prime Minister Manmohan Singh called for a "level playing field".

| TNN | Jan 15, 2008, 01.35 AM IST

BEIJING: India and China on Monday raised the target for two-way trade between the two Asian giants by 50% pegging it at $60 billion for 2010. The radical revision of the target came even as Prime Minister Manmohan Singh called for a "level playing field".

Taking up the case of Indian business against China's aggressive mercantile practices which have resulted in India running a huge and still-growing trade deficit, Singh favoured removal of non-tariff barriers, administered exchange rates and a strengthening of an Intellectual Property Rights regime by the Chinese authorities.

His advocacy came at the India-China Economic Trade and Investment Summit after chairpersons of CII and FICCI, Sunil Mittal and Habil Khorakiwala, led a chorus of complaints against unfair trade practices of the Chinese. The PM also called for developing "profitable business models that factor in our complementarities and competitive strengths".

Singh who had on Sunday told the delegation of Indian businessmen here to prepare for competition, repeated his advice that "All countries must compete in global markets." Then again, he also seemed to say that Indian businessmen need to do their own bit to ensure that the basket of exports to China did not consist overwhelmingly of iron ores and minerals. "I would urge Indian business to vigorously pursue opportunities for expanding non-traditional items of export," he said.

But he sounded sensitive to the long-held grievances of Indian businessmen, stressing the need for "greater market access for Indian goods" to help bridge the rising trade deficit.

Talking to newspersons, both Mittal and Khorakiwala strongly contested the suggestion that their constitutencies needed protection of government because they were unable to hold their own against the Chinese competition. The CII chief said fears that Chinese goods will swamp the Indian market forcing Indian enterprises to down their shutters have not come to pass.

But while asserting that Indian businessmen have more than held their own against the competition, he also said that certain features of the Chinese economy, such as the stake of government in most big units, were hurting Indian competitors by skewing the ground.

Khrakiwala also spoke in the similar vein. Their lament was endorsed by commerce minister Kamal Nath who mentioned specific instances such as the Chinese decision to levy a huge cess on coking coal that India imports. He continued, "There was no such cess in 2005 and today, it is as high as 25%. On the other hand, we are exporting iron ore for their need at an export duty realisation of only 1%."

The minister who had taken up the matter with his counterpart, Chen Jian, further said: "We lowered this duty at their request and it is now for the Chinese side to reciprocate in the area of coking coal."

Nath also said that he had also protested to Chen about the continued Chinese refusal to allow import of vegetables and fruits from India despite an agreement.

The focus of the Prime Minister, however, remained on collaboration and complementarities. "India and China are today the fastest growing large economies in the world. We should remember that China, India and Europe had almost equal shares of world income in the early 18th century. As the 21st century unfolds, both India and China stand poised to regain their weight in global economy," he said.

Elaborating on his plea for partnership, he said: "We will need to work together to ensure that we contribute to, even as we benefit from, the economic resurgence and integration of Asia. Our two economies are becoming engines of economic growth and must use our natural and human resources, technology for the common benefit of the region."

Still, there is recognition that Chinese practices were the main factor behind India's adverse trade deficit. This also explains why India is fighting shy of signing a Regional Trade Agreement even when projection on the volume of bilateral trade was drastically revised by Singh and the Chinese premier on Monday.

In 2005, the countries decided to aim for a $40 billion dollar volume by 2010. Now they have set their sights higher, confident of clocking $60 billion with no change in timeline. Indian business seems certain that the soaring volumes will benefit China more if the skew is not corrected.

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